Employment demand cools as salary growth lags behind inflation
New Zealand's employment market experienced a significant cooling period in the final quarter of 2025, with listing volumes falling by 19% compared to the previous quarter.
This shift marks a notable change in momentum following the marginal recovery observed in the spring months.
Trade Me Jobs head of jobs Nicole Williams (pictured) said while businesses were active earlier in the year, a period of cautious adjustment has taken hold.
“And now this is a market where we're seeing both businesses and job hunters being a bit cautious and deliberate,” she said.
This cooling trend was observed across nearly all major industries as the country headed into the summer break.
Some key insights from the study are the following:
- Overall job listings for the quarter were down 3% on a year-on-year basis
- Candidate demand per listing eased by 7% as job seekers shifted focus to the holidays
- The national average salary grew by 0.8% quarter-on-quarter to reach $72,254
- Annual salary growth of 3.1% continues to trail behind the current inflation rate
- Construction and roading listings bucked the trend with an 8% year-on-year increase
Seasonal hiring shifts
The 19% drop in listing volumes between the third and fourth quarters largely reflects a seasonal winding down as businesses shifted their focus toward the holiday break.
“We've got to remember there's a lot of seasonal impacts that play a role in the job market, so last quarter that included the Christmas period. And we know that businesses kind of start to slow down and stop hiring over that period and the same goes for job hunters who tend to switch into holiday mode,” Williams said.
While the spring recovery was encouraging, the market remains in a period of "cautious adjustment."
Retail and healthcare sectors were the biggest contributors to the decline, with listings falling by 15% and 13% respectively. These industries often see high volatility at year-end as staffing levels are locked in before the December rush.
Candidate demand also softened during the quarter, with a 7% drop in applications per listing compared to the previous three months. This suggests that job seekers were equally likely to pause their searches in favor of the summer break.
Despite the general slowdown, the construction and roading sector remained a rare bright spot for the economy. This industry recorded an 8% increase in listings compared to the same period in 2024, supported by ongoing infrastructure projects.
The manufacturing and operations sector experienced an 18% decline, highlighting the broader challenges facing the industrial heartland. These fluctuations are typical for the end of the year but appear more pronounced in the current economic climate.
Economic labor dynamics
The most significant concern for market analysts is the widening gap between salary growth and the rising cost of living in New Zealand. While the national average salary rose to $72,254.
Williams said the 3.1% annual increase is failing to keep pace with persistent inflationary pressures.
“So that means many Kiwis will be continuing to feel the pinch in their wallets as wages just aren't keeping up with the pace of inflation at the moment,” she said.
This disparity has a direct impact on mortgage serviceability and borrower stability across the country. When wage growth lags behind inflation, household discretionary income is squeezed, making it harder for borrowers to meet their financial obligations.
Regional data revealed "green shoots" in the South Island, particularly in Marlborough and Otago, where listing volumes remained more resilient than in the major metropolitan hubs. These regions are benefiting from strong seasonal demand in agriculture and tourism, which helps offset the national cooling trend.
In contrast, the Wellington and Auckland markets saw listing volumes dip by 24% and 21% respectively. This reflects a broader trend of public sector restructuring and corporate caution in the country’s primary economic engines.
As the New Zealand property market outlook remains tied to employment stability, these labor market shifts are being closely watched by the Reserve Bank. A softening labor market may eventually provide the central bank with the room needed to consider a shift in monetary policy.
